Xbox co-creator Ed Fries on Seattle’s status as a gaming hub, Nintendo Switch’s success, and more

Ed Fries calls himself a “proud parent” of Microsoft’s Xbox, but he’s also played an important role in nurturing the overall gaming industry in the Pacific Northwest.

Fries led the Redmond company’s game publishing unit as part of a 17-year career at the tech giant. Since then, he has kept busy as a board member or advisor for more than 20 gaming companies and other organizations, in a variety of sectors including gaming, eSports, virtual reality and more. He also serves on the board of the Pacific Science Center and the Smithsonian American Arts Museum.

Despite being 14 years removed from Microsoft and the Xbox, Fries remains a giant in the Seattle gaming community, which has gained national and international prominence in recent years. GeekWire caught up with Fries at the Economic Development Council of Seattle & King County‘s annual Economic Forecast Conference, where he spoke on a panel about arts and technology.

Fries is, naturally, a huge cheerleader for the Seattle area’s gaming industry. He cited a report from the Washington Interactive Network that found more than 400 gaming companies in the region. They range from some of the biggest gaming companies in the world — Valve, Bungie, Microsoft, Nintendo’s North American base — to small startups trying to get off the ground with just a couple of founders and an idea.

We talked about the local gaming scene, virtual and augmented reality, mobile games, startups he’s most excited about and the games he’s into right now. The conversation has been edited for length, style and clarity.

Nat Levy: Give us your take on the gaming industry in the Seattle area?

Ed Fries: There are over 400 game companies in the region — I think it was 423 — and that was in 2016, so I’m sure it’s higher now. 23,000 employees in the game business in the Puget Sound area, which is kind of shocking, and over $20 billion in direct revenue. The worldwide game business is $100 billion, so to have $20 billion of it here says a lot. This is clearly one of the best places in the world to make video games.

Fries: The game business is pretty resilient. When something goes bad at a company, what it means is a whole bunch of new companies sprout up. So now there’s PopCap people sprinkled all over in lots of other startups around the area doing great work. It’s almost like a plant that dies and drops its seeds, and then the seeds all sprout and make more plants. I think that’s the kind of thing that happens in the game business a lot.

NL: What gaming companies are you excited about right now?

Fries: It’s really hard to stay on top of it all because there’s so many new companies starting and doing so much great work. I always think I know everybody in the game business, and then somebody asks, Do you know the guys at MegaCrit? What’s MegaCrit? They have a game on Steam that sold 500,000 copies, and it’s two guys right out of school. I love that kind of story.

I love the story of Eric Barone, who created Stardew Valley. The guy graduated from school in Tacoma, wanted to work in the game business, but no one would hire him because he didn’t have any experience. So he spends four years living on Top Ramen and writes his own game from scratch, does all the programming, all the art, all the music. He comes out with Stardew Valley, and it’s this massive hit. Now he doesn’t need a job in the game business because he’s his own job.

Ed Fries speaks at Economic Development Council of Seattle & King County Economic Forecast Conference. (GeekWire Photo / Nat Levy)

NL: You’re pretty involved in the virtual reality world. Do you think that technology is living up to the hype, and what do you see going forward?

Fries: Things get really super hyped and then reality strikes for a while and then the real business appears. I think a couple years ago we were at the top of the hype. That’s a time when a lot of people are interested, and I’m not that interested. I’m more interested down here, when not a lot of people are as interested, but it’s about to become a real business. And I think that’s what’s going on with both VR and AR. It’s cooled down as far as hype goes, but there’s a ton of great work going on behind the scenes and the technology is evolving quickly. I become more confident all the time that this is going to become something real and something that’s going to matter.

NL: What do you see as the best outlets for virtual reality — gaming, medicine, enterprise, industrial?

Fries: I’m involved in all those things in different ways. There’s a company called HaptX, and they’re in part up here, and part in San Luis Obispo, and they’re building haptic technology, which means you can feel things. They have a very science-fiction vision of what they want to build, where you can touch and feel things in VR. The first step of that is to build a glove. They’ve gone through multiple prototypes, the first one you just stuck your hand in a machine and felt stuff on your hand, it’s about the size of a refrigerator. Now they have it down to about the size of an Xbox. You wear this glove and put on a VR headset and you can touch things and feel them. You pick up a spider and feel it walking around on your palm. But it also has motors across the backs of the fingers. Even though I could touch and feel this coffee cup, but my fingers would go through it and remind me that it’s fake, but what the motors do is stop your fingers at the right time, basically create resistance. …

It felt really real, not just to see things, but to touch and feel. That technology will get to consumers eventually, but first it’s going into high-end applications like industrial, military, that kind of thing. That’s one of the ways companies stay alive during this funding drought, by focusing on one specific area until the technology becomes broader.

NL: How far out are we from all VR headsets being wireless, and will that be a big change for the industry?

Fries: Valve’s headset, developed in cooperation with HTC, the Vive, they have a wireless module so you can remove the cable and just upgrade your existing headset. I think you’re going to start to see that built into the next generation of VR headsets going forward. I had my Rift on at home the other day, and my wife has a big dog, and the dog ran by, and got caught on the cable. Not only did it rip me out of VR, but it pulled my computer off the shelf. So for me it would be a big improvement.

When you get wireless, then you can start to be able to move around a much larger space. I’ve seen some of the tech that’s not that far away where these VR headsets are not much more than sunglasses. Right now, you strap this big thing on your head, but when you can just put something on your head the size of sunglasses, it’s going to become much easier for people to do and much more accessible.

Popular mobile game Clash of Clans.

NL: Are smartphones killing PC and console gaming?

Fries: Games are sort of a virus that go into any piece of tech. I don’t think it’s a question of one or the other. All these times in the past, people have predicted PC gaming was going to die because of console gaming or mobile gaming, and yet PC gaming is thriving. In some ways more developers are more excited about PC gaming going forward than anything. I don’t think it’s a this or that; I think it’s a this and that. I have boys and we play mobile games, we play console games, we play PC games. It’s all part of what we are doing.

The challenge on mobile games has to do with the audience finding the games. The market is so saturated, and there’s so many new games coming into the app store on any given day, and most of them just disappear without a trace. Meanwhile, a few companies are able to dominate with maybe not the best products but really great marketing spend.

And the way you can see stagnation in a market is when you see same games in the top 10 list year after year. And there’s been some of that in the mobile market. That has loosened up some in the last year. I think Apple has tried to help, as well. They no longer show the top grossing list, because why encourage people to spend more time on these same 10 games? I think we need more creative thinking in how to surface really fantastic games in the mobile market, so that it is more about quality than marketing spend.

NL: What games are you playing right now?

Fries: A group of game developers who I know have a guild in a game called Star Wars Galaxy of Heroes. This game is just about as grinding as a game can be. Every day, you’ve got to put in your hours, and you slowly level up these characters, but they are Star Wars characters so it’s cool. The fun is playing with this group of developers and the interaction. A couple of the people in the guild work on the game too.

We played a lot of console games at the end of last year. Horizon Zero Dawn was great on PlayStation, Persona 5, also a great PlayStation game. We have a Nintendo Switch at home. Zelda and Mario are great there. There isn’t a console game I’m playing right now so I’m between games. I get a lot of gaming stuff from my 12-year-old because he has more gaming time than I do. He’s very into PUBG, which is super huge right now.

NL: What are your impressions of the Nintendo Switch? Is there anything other gaming companies could learn from it?

Fries: When I first saw it, I thought it was creative, but I wasn’t sure if it was going to be successful. Some of the ideas we had actually talked about at Xbox, like having controllers you could separate and hold in each hand. I first played Zelda on the Wii U and enjoyed the game, and thought, maybe I don’t need a Switch. Eventually I buckled and got a Switch to play Mario, and I was really surprised how many different and creative ways they use the controllers, how they can be joined onto different supports, or you can separate them and hand them to another player and turn them sideways. It’s something that’s really won me over as a cool machine.

I love how creative Nintendo is. Now they have this Nintendo Labo with the cardboard. When I saw that I thought, good for you Nintendo, I just love how they’re always thinking outside the box. This cardboard thing ties into the whole maker movement, and it’s great to have kids building something physical.

I don’t think the right thing for Microsoft or Sony to do is imitate Nintendo or try to be Nintendo. I don’t think they’ll succeed by being Nintendo. I think they’ve gotta figure out what it is that they do well and continue to do that well.

The guts of the Xbox One X. (GeekWire Photo / Nat Levy)

NL: What do you think about how Xbox has evolved over the years?

Fries: Overall, I’m a proud parent of Xbox. I’m really glad I was part of it. And I’m rooting for Microsoft to continue to do well. I’m a big fan of Phil Spencer. Since he took over Xbox One — I think that product was launched poorly with a bad direction and he’s done a great job fixing it and redirecting it where it should be, which is aimed at core gamers and great gamer product.

The challenge when you work in technology is not to know what the future is — it’s really easy to say here’s what the future is going to be. The challenge is to know when the future is. If you look at the original Xbox, we said it should have a hard disk, it should be a PC-like architecture, very open to developers and easy to develop for. The hard disk went relatively unused, and it was an expensive thing to build into the original Xbox. In the Xbox 360 they made it optional, and they were able to compete better on price. They went for a very custom hardware set up, a very non-PC like architecture. So they kind of went away from the core values of the Xbox, but it was successful. The 360 was the right machine for the time.

If you look at the machines now — Xbox One and PS4 — they’re both what we were trying to build with original Xbox, we were a little early with the ideas. They are basically PCs in a box with Intel chips and hard disks and a machine that’s very friendly to developers. That’s something that makes the content better because it’s just easy for people to build on these machines. I think we had the right vision on the original Xbox, I just think we were a little early.

Nat Levy is a staff reporter at Geekwire covering a variety of technology topics, including Microsoft, Amazon, tech startups, and the intersection of technology with real estate, courts and government. Contact him at nat@geekwire.com and follow him on Twitter at @natjlevy.

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